The Nest

We briefly touched on this, but no one really had a good explanation of wtf was going on.  This is an editorial, but neatly sums it up. 

By John Fund for WSJ online. 

New York

It didn't seem possible that New York's state legislature, long known for backroom deals that favor entrenched politicians, could do anything to give itself a worse reputation. Then came a surprise coup in the state Senate last week.

Now Albany is locked in gridlock as both Democrats and Republicans claim to have enough votes to block the Senate's business. One judge has already refused to get involved in the dispute, and Democratic Gov. David Paterson looks helpless on the sidelines.

Most New Yorkers feel powerless to affect their legislature, and that goes for most of the members themselves. For decades, every issue of consequence has been controlled by three men in a room -- the Assembly speaker, the Senate majority leader and the governor.

Almost all legislation that handles big issues has been ushered through with no debate and no opportunity for members to modify it. The result is a political machine that keeps the state's government and bureaucracies up and running, but has been unable to respond to public demands for property-tax and other reforms.

Former Democratic state Sen. Daniel Hevesi has put it this way: "Governance in Albany is so broken that I don't believe it functions any longer as a representative democracy."

Even so-called reformers are part of the problem. The state's constitution requires that every 20 years voters be given the chance to vote on whether to convene a constitutional convention to inject fresh ideas into the process. The last time the issue came up, in 1997, most reform groups were either neutral or against the idea of a convention.

Francis Barry, a policy adviser to New York Mayor Mike Bloomberg, explains why in his new book, "The Scandal of Reform": "The most serious problem for good government groups was not that a convention might be run by elected officials but that it might be run by the wrong elected officials: Republicans."

In the end, a new convention was rejected by voters by a wide margin. Dysfunction-as-usual continued.

Enter Tom Golisano, a populist, an upstate billionaire, and a three-time independent candidate for governor. Last year, Mr. Golisano grew upset with the feckless GOP majority in the Senate and poured $5 million into the coffers of Democratic challengers, who won enough seats to end the GOP's 40-year control of that body.

But Mr. Golisano ended up with buyer's remorse when the new Senate Democratic majority refused to pass rules that would have made the budget process more transparent. The final straw came in April, when Democrats pushed through a budget that hiked spending and raised state income taxes to a height not seen in the state since the 1960s (the top marginal income tax rate is now 9%, up from 6.85%).

"It was irresponsible, since the top 1% of earners account for about half of state revenue," Mr. Golisano told me. "We're the ones who can -- and will -- leave."

He should know. He's already gone.

Mr. Golisano recently fled to tax-friendly Florida, a move that saves him $13,800 a day in taxes. But he didn't abandon his political projects in New York. He demanded and got a meeting with state Senate Majority Leader Malcolm Smith, reminding him of his pledges last year to be fiscally responsible. Mr. Golisano claims that Mr. Smith spent much of the meeting checking his BlackBerry.

Frustrated, Mr. Golisano shifted his support to two New York City Democratic senators, Pedro Espada and Hiram Monserrate, who staged last week's coup with the Republicans. The move was quickly denounced as media outlets noted the plotters appeared to be more upset by being shortchanged on pork-barrel projects than the violation of any great principle.

But Mr. Golisano's support came with a price. A new rules package was quickly unveiled that imposes term limits on the state Senate's leadership positions and chairmen, requires staff budgets to be allocated more fairly, and empowers a majority of senators to pull bills out of committee for a vote.

"It's a beginning," he told reporters. "I hope a lot more gets done."

Yet cynicism abounds. From the outset, Democrats refused to accept the outcome of the coup. Instead they walked out of the Senate chamber, turned out the lights, and locked the doors. They also pressured Mr. Monserrate into flipping back to their side, thus leaving the Senate divided with 31 votes on each side.

Not to be outdone, Mr. Espada countered by making the legally dubious claim that because he was elected Senate president last week, and is therefore also the state's acting lieutenant governor, he has the power to cast two votes (one as a senator, and second one as lieutenant governor) to break the impasse.

Messrs. Espada and Monserrate face cloudy futures. The former is under investigation for allegations that he doesn't actually live in the Bronx district he represents. The latter has been indicted on state charges for allegedly assaulting his girlfriend. (He has pleaded not guilty.) If either is forced from office, one of the parties will gain undisputed control of the Senate.

But unless that happens quickly, what's needed is for lawmakers to find a way to get beyond the mudslinging and focus on the state's core problems -- a deep recession, and a government that's raising taxes when employers are hurting in order to finance irresponsible spending on health care and education. (New York spends twice the national average per Medicaid patient and 63% more than the national average on education.)

Republicans have been complicit for so long in New York's budget mess that Dean Skelos, the Republican senate leader, needs to do more than promise reforms down the road. John Faso, the 2006 Republican candidate for governor, says an acid test should be whether Mr. Skelos and other Republicans can push through a cap on property taxes used to fund education spending increases. The cap, popular with homeowners, is reviled by teachers unions and politicians in Albany.

The coup in Albany has been a messy affair. But with the state government long hostage to its own arrogance, any disruption raises a potential for positive change. Mr. Golisano deserves points for providing that disruption, even though he has left the state.

Mr. Fund is a columnist for WSJ.com.